In response, Toutiao immediately posted an official apology, saying that all relevant advertisements have been removed, and managers of the promotion team have been suspended immediately.

The Cyberspace Administration of China (CAC) and the Beijing Municipal Administration of Industry and Commerce announced today that they launched an investigation into Toutiao and Sogou Inc. (NYSE: SOGO) regarding possible "insult or slander of heroic Chinese martyrs – Shaoyun Qiu," according to the news outlet People's Daily.

In response, Toutiao immediately posted an official apology, saying that all relevant advertisements have been removed, and managers of the promotion team have been suspended immediately.

"We admit that we made a huge mistake," Toutiao said in the latest announcement. "We failed to catch the inappropriate keyword provided by the third party during our screening process."

At issue was a banner ad that encouraged people to download a series of jokes about martyr Shaoyun Qiu, a celebrated hero in China. According to Chinese textbooks, Qiu chose to burn to death during the Korean War rather than betray his comrades' positions.

Toutiao's official announcement

The platform involved in the incident is called Douyin, a subsidiary of Toutiao. It is a rapidly growing, short-video social network app that was ranked as the most downloaded iOS app in the first quarter of 2018, according to a report from the U.S. research firm Sensor Tower.

Sogou was also associated with the slander allegations. As one of the largest search engines, Sogou failed to block the slander from spreading on the internet, which is considered illegal under terms of the new "Heroes and Martyrs Protection Act" introduced by the Communist Party just two months ago. The paid banner advertisement of Shaoyun Qiu ran on top of the search result for more than a day before it was removed.

Shares in Sogou dropped more than 3 percent today to $10.97 per share in New York after the CAC's notice.